Ethereum News Today: Investors Flee Ethereum's Tech Woes, Fuel Solana ETFs

Ethereum ETFs faced a record $219.4 million outflow in 24 hours, marking the fifth consecutive day of redemptions and underscoring growing investor caution in the crypto market. BlackRock's ETHA, the largest Ethereum ETF, accounted for $111.1 million of the outflow, while Grayscale's ETH product lost $68.6 million, according to the same report. This exodus follows broader institutional disengagement, a CoinEdition analysis shows, with Ethereum ETFs collectively shedding $363.8 million over three days as BlackRock and Fidelity led the sell-off. The outflows contrast sharply with inflows into Solana ETFs, which surged $197 million last week, highlighting a strategic reallocation of capital toward high-performance blockchains, according to Solana ETF inflows.

The Ethereum sell-off coincides with technical challenges for the network, including inefficiencies in its modexp precompile function, which hinder zero-knowledge proof scalability, a Coinotag report says. Vitalik Buterin has publicly acknowledged these limitations, which delay critical upgrades and raise concerns about Ethereum's competitive edge against layer-1 alternatives. Meanwhile, Solana's BSOL ETF attracted $195 million in its first week, driven by institutional demand for faster, lower-cost blockchain infrastructure, as noted in the CoinEdition analysis. Analysts like Lark Davis note that Ethereum's struggles reflect a maturing market where investors prioritize scalable solutions over established leaders, echoing earlier coverage of Solana ETF inflows.

Market sentiment remains bearish, with Ethereum's price dipping below $3,500 amid weak derivatives activity and declining open interest (OI); Ethereum price dips below $3,500 reports. The OI-weighted funding rate of 0.0038% further signals risk-off behavior, with short positions dominating trading activity. Futures OI for Ethereum fell to $44.72 billion, down from October's peak of $63 billion, as traders close long positions. On the technical front, Ethereum's price structure has broken below key support levels, with indicators like RSI and on-balance volume (OBV) pointing to ongoing weakness, as previously detailed by Coinotag.

Despite the outflows, some analysts remain cautiously optimistic. Ethereum's spot ETFs have still accumulated $14.14 billion in net inflows since their 2024 launch, per the CoinEdition analysis, and BlackRock's remaining holdings—4.002 million ETH valued at $15.37 billion—suggest long-term institutional commitment, as earlier reporting on Solana ETF inflows also observed institutional rotation. Projections for Ethereum to reach $7,500 by 2026 hinge on sustained demand, network upgrades, and macroeconomic conditions, according to an Ethereum $7,500 forecast. However, immediate challenges persist, including the modexp bottleneck and the need for renewed investor confidence.

The divergence in ETF flows reflects a broader shift in crypto strategy. While Bitcoin and Ethereum face outflows totaling over $750 million combined, Solana's inflows highlight a preference for networks with higher throughput and lower fees. This trend aligns with on-chain data showing Solana's TVL at $10.59 billion and daily transaction volumes exceeding 50 million. As the market evolves, investors are balancing risk across assets, with Ethereum's technical upgrades and institutional rebalancing poised to play pivotal roles in its recovery.